From DealBook: McGraw-Hill in Talks to Lead Stock Indexes Joint Venture
S&P 500 and the Dow Jones Industrial Average are two of the most popular measures of the US economy. Those two indices, along with thousands of others created by the two companies have come to be accepted standards and benchmarks. Because they are accepted there’s lot of other opportunities.
“Those two benchmarks, however, are just the tip of a huge business. The companies own hundreds of thousands of indexes that track stocks, commodities and more exotic investments. Dow Jones Indexes alone has more than 130,000 indexes. Licensing these indexes for financial products can be a lucrative business.”
Most of these indices have something in common though; they focus on publicly traded companies; these are big companies with lots of data available. There’s a huge gap in data on small and mid-market firms that are generally much more opaque. The WAIN Street Business Credit Health Index (BCH Index) is a platform for filling this gap. Immediately it’s a tool for lenders to better manage their loan portfolios to small and mid-market businesses; but this also is just the tip of the iceberg. In the future this index will enable entire categories of financial and insurance products around these same companies; this is something that can’t be done right now since there’s simply not adequate benchmarks and data.